Final Rules Issued for the Illinois Paid Leave for All Workers Act – 9 Things You Should Know

By: Nicholas Golding and Mark McAnulty

The Illinois Department of Labor (IDOL) recently published its Final rules for interpreting the Illinois Paid Leave for All Workers Act (IPLA) and updated the FAQ section of its website regarding the administration of Illinois Paid Leave (IPL).  The nine most significant changes are summarized below.

1. Rate of Pay

In the Proposed rules, IDOL required a “regular rate of pay” calculation and directed employers to the federal wage and hour regulations on how to ascertain the “regular rate” when calculating overtime, which went beyond the statutory language of the IPLA.  IDOL has now removed all references to “regular rate” in the Final rules, confirming that employees are to be paid their hourly rate of pay when taking IPL. For employees receiving gratuities or commissions as part of their compensation, the rate of pay is now either the full minimum wage in the jurisdiction where the employee is employed, or the agreed-upon hourly rate, whichever is higher.

The Final rule still fails to clearly address how to calculate the hourly rate for employees who receive different rates of pay. With the deletion of the “regular rate of pay” language, there is a good argument that, if the rate of pay an employee would receive is foreseeable for the period they are taking leave, then that is the hourly rate at which the IPL should be paid. However, until there is further guidance, the safest approach continues to be to blend the two pay rates, or pay the higher rate.

2. Notice of Frontloaded IPL

The Final rule now specifies that written notice of the amount of frontloaded leave be provided on or before an employee’s first day of initial employment or on or before the first day of the initial 12-month period, and if the employer ever changes the amount of frontloaded leave, then before that change is implemented.

3. IPL Balance

The Final rule deleted the requirement that an employee’s unused balance of paid leave appear on each paystub or form notifying employees of deductions from wages.  The Final rule now requires the employee to request their unused IPL balance before the employer must provide it.

4. Use of IPL

The Final rule makes even more clear that it is the employee’s choice on whether to use IPL before using any other leave provided by the employer or under Illinois law.

5. Notice Requirements

While an employee may request IPL orally or in writing, the Final rule now allows an employer to have a written policy requiring an employee to provide written notice of the leave even after making an oral request.

6. Denial of Requests

The Final rule deletes the Proposed rules’ list of specific guidelines for denying IPL and provides employers with more flexibility. Under the Final rule, an employer may deny IPL if all of the following conditions are met:

  1. The employer’s policy for considering and denying requests is disclosed to the employee in writing; and
  2. The employer’s policy establishes certain limited circumstances in which IPL may be denied in order to meet the employer’s operational needs for the requested time period; and
  3. The employer’s policy is consistently applied to similarly situated employees and does not effectively deny an employee adequate opportunity to use all IPL they are entitled to over the 12-month period.

The FAQ’s confirm that, provided the above conditions are met, employers can establish “blackout dates,” such as holidays and peak seasons, during which IPL can be denied due to operational necessity. The FAQ provides the following example:

An Accounting Firm has a peak season from April 1-16.  In the employee handbook, they tell employees that leave requests will be limited during that period due to staffing needs.  During that busy season, the Accounting Firm may deny leave requests per their policy.

7. Carry Over

The Final rule specifies that employers may establish a policy restricting employees who accrue IPL from carrying over more than 40 hours of unused IPL to the next 12-month period, down from the 80 hours specified in the Proposed rule. For front-loaded IPL, no carryover is required.

8. Accrued Vacation Leave

A word of warning to employers who revised their existing vacation policies to provide for the 40 hours of IPL — the FAQ’s have been updated to advise that it is “likely” employees may be entitled to payment for any earned but unused vacation time for which they were not compensated.

The FAQ states:

I have earned vacation days from my employer that I have not yet used. My employer is wiping out my vacation bank and converting their paid leave plan to match the new Act. Am I entitled to the leave in my vacation bank?

Yes, you are likely entitled to that existing earned vacation leave. The Illinois Wage Payment and Collection Act regulations further state “[a]n employer cannot effectuate a forfeiture of earned vacation by a written employment policy or practice of the employer.” [56 IAC 300.520(h)]. Employers cannot diminish vacation benefits that have already been provided to employees including converting, reducing, or eliminating vacation leave that the employee already earned but not used prior to 1/1/24.

9. Interaction with the FMLA

The FAQ’s have been updated to confirm that employers may require employees on FMLA leave to use IPL concurrently with their FMLA leave.

For more information or assistance on this topic, please contact Nicholas Golding, Mark McAnulty or another member of the KDDK Labor and Employment Practice Group.

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